NZ watchdog gets record investor payout

New Zealand's competition watchdog has secured a record compensation deal for investors over allegations that
ANZ National Bank
and
ING
misrepresented the risk involved in two retail funds. A total of $NZ45 million will be paid to investors affected by the freezing of two ING funds in March 2008, in return for waiving legal action, the Commerce Commission said on Tuesday.

At the time they were frozen, the funds were worth about $NZ533 million, and together had around 15,000 individual investors.

"In the Commission's view, representations made by ANZ and ING concerning the degree of investment risk in the funds were likely to be misleading in that the actual risk was understated," Commerce Commission Chairman Mark Berry said in a statement.

ANZ, which owns the New Zealand business of Dutch financial group ING, has said it already made available more than $NZ500 million to investors in the funds, after it offered a settlement in 2009.

"We apologise to those investors who felt we had misinformed them," ANZ National Bank's acting chief executive Steven Fyfe said in a statement.

"While we do not agree with all of the Commission's views we do agree that it is in the best interests of investors to avoid a lengthy court process," Mr Fyfe said.

Both the ING Diversified Yield Fund and ING Regular Income Fund invested largely in collateralised debt obligations, which were exposed to the US subprime lending market, which collapsed, triggering the global financial crisis.